ALMATY, Kazakhstan: Iran and world powers sit down for two days of talks Friday in the hopes of putting an end to a decade-old nuclear dispute that has left the Islamic republic enduring UN sanctions and risking military action from its arch foe Israel.

At stake in the Kazakh mountain city of Almaty will be whether Iran is ready to accept a series of watered-down demands that the powers presented at the last such negotiations at the same venue in February.

Failure could prove costly to both sides. A possible war would likely see a global spike in oil prices — putting a tenuous economic recovery in further peril — and draw in other regional powers at an already unstable time in the Middle East.

But progress at these talks has been fleeting and neither side realistically expects a breakthrough by the time the two-day meeting winds down on Saturday.

Chief Iranian negotiator Saeed Jalili told the six world powers — comprised of the five permanent UN Security Council members and Germany and known collectively as the P5+1 — that Iran demanded an immediate recognition of his country’s right to enrich uranium.

“We think that they can open up tomorrow’s (Friday’s) talks with one phrase — and that is to accept Iran’s right, particularly its right to enrich,” Jalili said in a speech at an Almaty university ahead of the negotiations.

The demand is inherently objectionable to the powers because Iran is prohibited from enriching uranium by the United Nations and is heavily sanctioned for its secretive work.

Iranian President Mahmoud Ahmadinejad tours Tehran’s research reactor centre on February 15, 2012

Jalili also appeared to downplay the chances of his one-on-one meeting with chief US negotiator Wendy Sherman — talks Washington has been seeking for years.

“What our nation is expecting is for the US to correct its behaviour, and not in just words, and tomorrow in Almaty they are in for another test,” said Jalili.

The P5+1 grouping is particularly concerned about Iran’s enrichment to levels of up to 20 percent and the Fordo fortified bunker where such activity is conducted.

They also want Iran to ship out its existing stockpile of 20-percent enriched material.

Iran denies it is developing the atomic bomb and argues that it needs its nuclear programme for peaceful medical and energy needs.

The powers proposed in February that Iran shutter the Fordo reactor and in exchange receive small concessions that hold out the hope of greater ones if it made a bigger step.

Iran has reportedly been offered the right to deal in some precious metals and perform small financial transactions now prohibited by international sanctions. Teheran has already called this approach unbalanced.

But a senior US administration official said the proposal on the table now was “balanced and very fair.”

“We hope Iran comes prepared and makes a concrete and substantive response” to a package proposed in February.

“I would hope that we are not at any last chance,” the US official said.